Nigeria's Federal Inland Revenue Service (FIRS) has issued a Public Notice directing all companies that enjoyed capital allowances on their assets between 2016 and 2021 years of assessment, to submit their Certificates of Acceptance no later than 31 October 2022.
Below are the key points in the Public Notice:
- Any company that incurred Qualifying Capital Expenditure (QCE) of N500,000 and above, must obtain the Certificate of Acceptance in respect of the QCE from the Industrial Inspectorate Division of the Federal Ministry of Industries, Trade and Investment.
- All companies which enjoyed capital allowances on QCE between 2016 and 2021 years of assessment, are to submit their Certificate of Acceptance to the FIRS no later than 31 October 2022.
- Any company that fails to submit the relevant Certificate of Acceptance will have its capital allowances for the period withdrawn by the FIRS, resulting in additional tax assessment to the defaulting company.
Our comments:
Based on the provisions of the Companies Income Tax Act (CITA), Certificate of Acceptance is not a precondition for claiming capital allowances on assets. The purpose and the applicable penalties for non compliance are contained in the Industrial Inspectorate Act. Given that FIRS can verify the ownership, control and beneficial usage of assets for business purposes through alternative procedures. Therefore, insisting on Certificates of Acceptance will only serve to increase the cost of compliance and unduly expose taxpayers to additional tax assessments with attendant dispute resolution through the Tribunal and Court system.
Download FIRS Public Notice on Submission of Certificates of Acceptance